Schools, health, science and innovation, and transport all benefit in Budget 2012 from the Future Investment Fund set up to invest proceeds from the sale of minority shareholdings in four SOEs and Air New Zealand, says Finance Minister Bill English.
“The Government is committed to investing in modern infrastructure that helps build a faster-growing economy with more exports and more real jobs, without borrowing more from overseas lenders.
“That’s precisely what the partial sale of shares is all about. The Treasury is forecasting sale proceeds of $5 billion to $7 billion over the next three to five years.
“That money will go into the Future Investment Fund and be used to pay for better public assets such as modern schools, hospitals, and transport infrastructure, while reducing the Government’s borrowing by $5 billion to $7 billion.”
Budget 2012 allocates an initial $558.8 million, including:
· The first $33.8 million of $1 billion ring-fenced for modernising and transforming New Zealand schools as part of the Government’s 21st Century Schools programme. More of this money will be allocated in future Budgets, after a review of school property management.
· A further $250 million towards the KiwiRail Turnaround Plan.
· $88.1 million for the health sector, most of which will go towards hospital redevelopments.
· $76.1 million for the creation of the new Advanced Technology Institute.
The fund is notional, like the Canterbury Earthquake Recovery Fund. Spending and receipts will be smoothed over the fund’s lifetime.
“Investing the share sale proceeds in this way will result in valuable assets that are owned by the Crown, as part of a growing asset pool, on behalf of all New Zealanders.
“The SOE share sale programme is a win-win. New Zealand savers get to invest in large Kiwi companies, and the Government frees up $5 billion to $7 billion to buy new assets without extra borrowing.
“Being listed on the stock exchange will provide greater transparency and discipline for the companies.”
The Government has confirmed Mighty River Power will be the first energy SOE to be partially floated – likely to be in the third quarter of this year, subject to market conditions.
The other companies in the share offer programme are Genesis, Meridian, Solid Energy, and Air New Zealand.
“The Government expects 85 to 90 per cent New Zealand ownership after the partial share floats, including the Government’s commitment to retain a controlling stake of at least 51 per cent in each company.
“Details of the structure of the Mighty River Power initial public offer and share allocation will be announced after legislation is passed later this year.”
The $558.8 million allocated from the fund in Budget 2012 builds on $4.3 billion of new infrastructure spending over the past three Budgets for projects such as schools and ultra-fast broadband, and billions of dollars more to pay for the Government’s share of rebuilding Christchurch.
In addition to Budget initiatives, the Government is investing about $12 billion over the next 10 years to improve the State highway network and $4.6 billion through Transpower over the next 10 years to upgrade the national grid.
“Well-targeted investment in infrastructure helps lift productivity which, over time, will mean better wages and higher living standards for New Zealand families.
“The Government’s large investment is also directly supporting thousands of jobs – and indirectly supporting many thousands more.”
Source: Office of Bill English.